BMW fights back against Mercedes with biggest model launch to date

Krueger with a 530e iPerformance sedan. "We are launching the biggest model offensive ever," he said.

MUNICH -- BMW Group plans the biggest rollout of new and revamped models in its history as the automaker fights back after losing the sales crown to Mercedes-Benz.

Over the next two years, BMW will unveil 40 variants, including the new X2 compact SUV and full-sized X7 crossover.

CEO Harald Krueger is seeking to revitalize growth after profitability fell to a six-year low in 2016 and sales slipped behind Mercedes for the first time in more than a decade.

“We are launching the biggest model offensive ever,” Krueger said at the annual press conference. “We have started a transformation unlike anything our company has seen before.”

The combative tone marks a turnaround after Krueger, who took charge in 2015, stumbled out of the gates. The revamped 7-series sedan failed to challenge the Mercedes S class, while the redesign of the 5 series was cautious. Krueger is focusing on profitability instead of sales to conserve resources for a costly shift to an era of self-driving, electric vehicles, with a plan to release the autonomous iNext in 2021.

Rising costs

After spending 5.16 billion euros, or 5.5 percent of its revenue, on research and development last year, BMW said it plans to invest at an even higher rate in the coming two years. Amid increased costs, the company predicted profit and revenue will rise “slightly” in 2017, and the automotive margin will remain in its range of between 8 percent and 10 percent.

Beyond the 40 new models, BMW plans to boost its offering of lucrative, luxury vehicles to complement the top-of-the-line 7-series sedan. The goal is to challenge Mercedes and make BMW “the strongest brand in this segment and significantly increase our sales volumes and revenues here by 2020,” Krueger said.

“Profitability is more important for us than the sales volume race,” said Chief Financial Officer Nicolas Peter. BMW’s global brand deliveries rose 5.2 percent to 2 million cars last year, less than half the 11 percent rate at Mercedes brand, which eased past its rival by selling 2.08 million vehicles.

"Editor's note: An earlier version of this story referred to Mercedes and BMW sales figures without making clear that they referred to brand sales at both automakers."